Eiess v. USAA Fed. Sav. Bank
Citation | 404 F.Supp.3d 1240 |
Decision Date | 23 August 2019 |
Docket Number | Case No. 19-cv-00108-EMC |
Parties | Elizabeth EIESS, Plaintiff, v. USAA FEDERAL SAVINGS BANK, Defendant. |
Court | U.S. District Court — Northern District of California |
Jonathan M. Streisfeld, Pro Hac Vice, Kopelowitz Ostrow P.A., Fort Lauderdale, FL, Todd David Carpenter, Carlson Lynch LLP, San Diego, CA, Andrea R. Gold, Hassan Ali Zavareei, Tycko & Zavareei LLP, Jeffrey Douglas Kaliel, Sophia Goren Gold, Kaliel PLLC, Washington, DC, Annick Marie Persinger, Tanya Susan Koshy, Tycko & Zavareei LLP, Oakland, CA, for Plaintiff.
Megan Sandra Webster, Thomas Vangel Panoff, Mayer Brown LLP, Chicago, IL, Elspeth Victoria Hansen, Mayer Brown LLP, Palo Alto, CA, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO COMPEL ARBITRATION
Plaintiff Elizabeth Eiess has filed a putative class action against Defendant USAA Federal Savings Bank ("USAA"), alleging that she is a customer of USAA and that USAA has improperly assessed fees against her and others similarly situated. Ms. Eiess has asserted claims for breach of contract and unjust enrichment, as well as violation of California consumer protection laws. USAA has moved to compel the entirety of the case to arbitration. Arbitration, if it were to go forward, would be on an individual basis only – i.e. , Ms. Eiess could not proceed with any class claims.
Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby GRANTS in part and DENIES in part USAA's motion to compel arbitration.
In the operative first amended complaint ("FAC"), Ms. Eiess alleges as follows.
Ms. Eiess is a customer of USAA and maintains a checking account with the bank. See FAC ¶ 13. Since 2014, she has resided in California. See FAC ¶ 20.
In October 2018, she tried to use funds in her USAA checking account to pay for a credit card bill (in the amount of $358.83). See FAC ¶ 21. "USAA rejected payment of that transaction due to insufficient funds and charged [her] a $29 NSF [non-sufficient funds] Fee for doing so." FAC ¶ 22. "Three days later, ... the same transaction was submitted for payment again" – (presumably, by the credit card company), but USAA again rejected the transaction due to insufficient funds and charged Ms. Eiess a second NSF Fee of $29. FAC ¶ 23. Five days later, the same transaction was submitted for payment, and USAA charged Ms. Eiess a third NSF Fee of $29 based on insufficient funds. See FAC ¶ 25. In short, "USAA charged [Ms. Eiess] $87 in fees to attempt to process a single $358.85 payment." FAC ¶ 27 (emphasis omitted).
According to Ms. Eiess, by charging multiple NSF Fees for only one transaction, USAA has breached the terms of contracts that exist between them – namely, a Deposit Agreement, an Online Banking Agreement, and a Fee Schedule. Ms. Eiess maintains that these documents expressly state that USAA will charge only one NSF Fee per single transaction. Ms. Eiess further asserts that, because the above documents are publicly available, members of the public who consider opening a checking account with USAA will be misled by its representations that it only charges one NSF Fee per transaction.1
Based on, inter alia , the above allegations, Ms. Eiess brings a claim for breach of contract or, in the alternative, unjust enrichment. Ms. Eiess also brings two statutory claims – i.e. , a claim for violation of California Business & Professions Code § 17200 and a claim for violation of the California Consumer Legal Remedies Act ("CLRA"). Ms. Eiess seeks to bring all claims as class claims. For the statutory claims, part of the relief sought is injunctive in nature; in particular, Ms. Eiess seeks an order preventing USAA from misrepresenting its NSF Fee policy in its publicly available documents.
In response to Ms. Eiess's lawsuit, USAA has moved to compel arbitration of all of her causes of action, both common law and statutory. USAA notes that there is an arbitration clause contained in the Deposit Agreement between the parties. See FAC, Ex. A (Deposit Agreement). If USAA is successful in compelling arbitration, then, by the terms of the arbitration provision, Ms. Eiess may not proceed with any class claims and instead is limited to resolution of her individual claims only.
The arbitration clause provides, in relevant part, as follows:
FAC, Ex. A (Deposit Agreement at 31-33) (emphasis in original).
Also included in the arbitration clause is a provision that restricts the arbitrator's ability to award public (as opposed to private) injunctive relief.
FAC, Ex. A (Deposit Agreement at 33). Because the arbitration clause requires covered claims to be arbitrated rather than litigated, and then bars an arbitrator from awarding public injunctive relief, the clause effectively provides that a USAA customer waives the ability to seek public injunctive relief in any forum, whether judicial or arbitral. USAA does not dispute such. USAA also does not dispute that, under California law, a waiver of public injunctive relief in any forum is not enforceable, see McGill v. Citibank N.A. , 2 Cal. 5th 945, 216 Cal.Rptr.3d 627, 393 P.3d 85 (2017), and that, under Ninth Circuit law, the "McGill rule" is a generally applicable contract defense that is not preempted by the Federal Arbitration Act ("FAA"). See Blair v. Rent-A-Center, Inc. , 928 F.3d 819, 830-31 (9th Cir. 2019).
The parties agree that the FAA applies with respect to their dispute over whether Ms. Eiess's causes of action should be compelled to arbitration. Under the FAA, an agreement to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. "The final clause of § 2, its saving clause, permits agreements to arbitrate to be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability, but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." Sakkab v. Luxottica Retail N. Am., Inc. , 803 F.3d 425, 432 (9th Cir. 2015) (internal quotation marks omitted).
Initially, the parties' focus largely seemed to be on the McGill rule and whether it was preempted by the FAA; however, with Ms. Eiess's sur-reply and then oral argument at the hearing on the motion to compel, other issues came to the forefront, including the issue of whether a contract had ever formed between Ms. Eiess and USAA because the Deposit Agreement contained the following "unilateral modification" provision.
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